DREYFUS INVESTORS GNMA FUND
LETTER TO SHAREHOLDERS
Dear Shareholder:
With 1994 and the worst bond market in 70 years behind us, 1995 has been
a welcome relief. Since the beginning of the year the bond markets have
rallied substantially, right through the Federal Reserve Board's final
tightening in February when the Federal Funds rate was raised by 50 basis
points. The market continued to rally when the Federal Reserve then loosened
the Federal Funds rate in July by 25 basis points. After seven corrective
tightening moves totaling 300 basis points, the Fed has finally started to
loosen credit.
As of June 30, 1995, the net asset value of Dreyfus Investors GNMA Fund
was $15.04. The total return for your Fund for the six months ended June 30,
1995 was 10.17%.* Dividends paid from net investment income for the six-month
period were approximately $.539 per share. The annualized distribution rate
per share for the period was 7.18%, based on the closing net asset value on
June 30, 1995.
Over the last six months, the Fund's total return has lagged the Lehman
Brothers GNMA Index slightly. Our return was 10.17% versus 10.84% for the
Index.** For the last three months, our performance was 5.44% compared to
5.29% for the Lehman Brothers GNMA Index. The main reason for the six months'
underperformance was that Lehman Brothers made a major correction in its GNMA
Index which we used as a benchmark for determining the duration of securities
in the Fund's portfolio.
Because of the conservative manner in which the Fund is managed, the Fund
is usually no more than a year in duration longer or shorter than the Index.
For several months in late 1994 and early 1995, the Lehman Brothers GNMA
Index did not accurately depict the overall duration of the market until it
was readjusted on January 30, 1995. We immediately began to make changes in
the portfolio to conform with the corrected Lehman figures. To eliminate this
type of problem in the future, we will look to three indexes in an attempt to
come up with the proper duration for the market and for the Fund.
The major strategy employed has been one of anticipating higher
prepayment rates from May through October 1995 and structuring the portfolio
so that in the event of faster prepayments, the Fund may be only marginally
affected. Currently, just 12% of the Fund is invested in GNMA 7% coupons
compared to no allocation just three months ago. This led to a lengthening of
the average life and duration of the Fund. The other strategic move we made
during this period was to increase our long Treasury bond holdings by 8%.
These securities also increased the Fund's average life and lengthened the
Fund's duration in an attempt to diminish prepayment exposure.
We are hopeful that these strategies will result in higher yields for the
Fund along with better and more consistent returns. Of course, the portfolio
may be restructured from time to time as economic or market conditions
dictate.
Very truly yours,
Garitt A. Kono
Portfolio Manager
August 2, 1995
New York, N.Y.
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Unlike the Fund, the Lehman
Brothers GNMA Index is an unmanaged total return performance benchmark for
the GNMA market, consisting of 15- and 30-year fixed-rate securities backed
by mortgage pools of the Government National Mortgage Association.
<TABLE>
<CAPTION>
DREYFUS INVESTORS GNMA FUND
STATEMENT OF INVESTMENTS JUNE 30, 1995 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES-92.8% AMOUNT VALUE
---------------- ---------------
<S> <C> <C>
MORTGAGE-BACKED CERTIFICATES-76.1%
Government National Mortgage Association I:
7%, 11/15/2022-7/15/2024................................................ $ 5,944,963 $ 5,859,475
7 1/2%, 9/15/2021-6/15/2025............................................. 8,864,243 8,927,889
8%, 6/15/2017-11/15/2024................................................ 3,597,712 3,688,770
8 1/2%, 8/15/2018-2/15/2025............................................. 3,470,732 3,608,451
9%, 12/15/2009-11/15/2022............................................... 4,674,684 4,914,539
9 1/4%, 10/15/2023...................................................... 966,745 998,463
9 1/2%, 1/15/2017-12/15/2021............................................ 1,382,180 1,467,266
---------------
29,464,853
---------------
Government National Mortgage Association II:
9%, 3/20/2016-9/20/2021................................................. 287,976 299,944
9 1/2%, 9/20/2021-12/20/2021............................................ 490,024 515,290
---------------
815,234
---------------
Federal Home Loan Mortgage Corp.,
Real Estate Mortgage Investment Conduit:
Ser.77, Cl. F,
8 1/2%, 6/15/2017..................................................... 200,000 202,974
Ser.86, Cl. F,
9%, 10/15/2020........................................................ 300,000 331,170
Ser.128, Cl. H,
8 3/4%, 9/15/2019..................................................... 1,000,000 1,028,560
Ser.1030, Cl. E,
9%, 3/15/2019......................................................... 1,000,000 1,040,010
Ser.1092, Cl. J,
8 1/2%, 5/15/2020..................................................... 1,000,000 1,053,390
Ser.1395, Cl. C,
6%, 11/15/2018........................................................ 1,948,083 1,914,264
Ser.1455, Cl. K,
7%, 6/15/2020......................................................... 1,500,000 1,477,875
---------------
7,048,243
---------------
Federal National Mortgage Association,
Real Estate Mortgage Investment Conduit;
Cl. G27-E,
8 1/2%, 2/25/2018....................................................... 767,749 773,185
---------------
TOTAL MORTGAGE-BACKED CERTIFICATES.......................................... 38,101,515
===============
U.S. TREASURY BONDS-11.2%
8 3/4%, 5/15/2020....................................................... 4,500,000 5,585,625
===============
DREYFUS INVESTORS GNMA FUND
STATEMENT OF INVESTMENTS (CONTINUED) JUNE 30, 1995 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
------------------------------
U.S. TREASURY NOTES-5.5%
4 5/8%, 2/15/1996....................................................... $ 600,000 $ 595,969
7 1/2%, 2/15/2005....................................................... 2,000,000 2,178,438
---------------
TOTAL U.S. TREASURY NOTES................................................... 2,774,407
===============
TOTAL BONDS AND NOTES
(cost $45,635,826)...................................................... $46,461,547
===============
SHORT-TERM INVESTMENTS-8.6%
Repurchase Agreement;
Lanston (Aubrey G.) & Co., Inc., 6.10%
Dated 6/30/1995, Due 7/3/1995 in the amount of $4,302,186 (fully
collateralized
by $4,470,000 U.S. Treasury Bills, due 12/14/1995, value $4,358,079)
(cost $4,300,000)....................................................... $ 4,300,000 $ 4,300,000
===============
TOTAL INVESTMENTS
(cost $49,935,826)...................................................... 101.4% $50,761,547
============== ===============
LIABILITIES, LESS CASH AND RECEIVABLES...................................... (1.4%) $ (682,582)
============== ===============
NET ASSETS.................................................................. 100.0% $50,078,965
============== ===============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTORS GNMA FUND
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995 (UNAUDITED)
<S> <C> <C>
ASSETS:
Investments in securities, at value-Note 1(b)
(cost $49,935,826)-see statement...................................... $50,761,547
Interest receivable..................................................... 371,044
Receivable for shares of Beneficial Interest subscribed................. 71,140
Prepaid expenses........................................................ 22,212
---------------
51,225,943
LIABILITIES:
Due to The Dreyfus Corporation.......................................... $ 56,253
Due to Custodian........................................................ 57,951
Payable for investment securities purchased............................. 948,670
Payable for shares of Beneficial Interest redeemed...................... 16,471
Accrued expenses........................................................ 67,633 1,146,978
-------------- ---------------
NET ASSETS.................................................................. $50,078,965
===============
REPRESENTED BY:
Paid-in capital......................................................... $50,141,979
Accumulated net realized (loss) on investments.......................... (888,735)
Accumulated net unrealized appreciation on investments-Note 4........... 825,721
---------------
NET ASSETS at value applicable to 3,330,690 outstanding shares of
Beneficial Interest, equivalent to $15.04 per share
(unlimited number of $.001 par value shares authorized)................. $50,078,965
===============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTORS GNMA FUND
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $1,785,371
EXPENSES:
Management fee-Note 3(a).............................................. $ 138,833
Shareholder servicing costs-Note 3(b)................................. 87,274
Registration fees..................................................... 20,108
Trustees' fees and expenses-Note 3(c)................................. 16,664
Auditing fees......................................................... 15,675
Custodian fees........................................................ 13,012
Legal fees............................................................ 6,055
Prospectus and shareholders' reports.................................. 5,263
Miscellaneous......................................................... 4,055
----------------
306,939
Less-expense reimbursement from Manager due to
undertakings-Note 3(a)............................................ 229,087
----------------
TOTAL EXPENSES.................................................. 77,852
---------------
INVESTMENT INCOME-NET........................................... 1,707,519
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 4................................. $1,078,524
Net unrealized appreciation on investments.............................. 1,744,508
----------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................. 2,823,032
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $4,530,551
===============
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTORS GNMA FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, 1995
1994 (UNAUDITED)
--------------- -------------------
<S> <C> <C>
OPERATIONS:
Investment income-net.................................................. $ 3,499,509 $ 1,707,519
Net realized gain (loss) on investments................................ (1,967,259) 1,078,524
Net unrealized appreciation (depreciation) on investments for the period (2,115,432) 1,744,508
--------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...... (583,182) 4,530,551
--------------- -------------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net.................................................. (3,490,557) (1,716,471)
--------------- -------------------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold.......................................... 18,193,639 9,969,567
Dividends reinvested................................................... 2,338,409 1,131,092
Cost of shares redeemed................................................ (25,744,866) (8,772,973)
--------------- -------------------
INCREASE (DECREASE) IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS (5,212,818) 2,327,686
--------------- -------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......................... (9,286,557) 5,141,766
NET ASSETS:
Beginning of period.................................................... 54,223,756 44,937,199
--------------- -------------------
End of period (including undistributed investment income-net;
$8,952 in 1994)...................................................... $ 44,937,199 $ 50,078,965
=============== ===================
SHARES SHARES
----------------- -------------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................ 1,237,307 678,930
Shares issued for dividends reinvested................................. 159,653 77,060
Shares redeemed........................................................ (1,744,696) (599,855)
----------------- -------------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING........................ (347,736) 156,135
================= ===================
See independent accountants' review report and notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
DREYFUS INVESTORS GNMA FUND
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from the Fund's financial statements.
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, 1995
----------------------------------
PER SHARE DATA: 1990 1991 1992 1993 1994 (UNAUDITED)
------- ------ ------ ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...................................... $14.55 $14.55 $15.34 $15.20 $15.39 $14.16
------- ------ ------ ------- ------- -----------
INVESTMENT OPERATIONS:
Investment income-net..................................................... 1.20 1.06 1.16 1.11 1.08 .54
Net realized and unrealized gain (loss)
on investments.......................................................... -- .79 (.14) .19 (1.23) .88
------- ------ ------ ------- ------- -----------
TOTAL FROM INVESTMENT OPERATIONS........................................ 1.20 1.85 1.02 1.30 (.15) 1.42
------- ------ ------ ------- ------- -----------
DISTRIBUTIONS;
Dividends from investment income-net...................................... (1.20) (1.06) (1.16) (1.11) (1.08) (.54)
------- ------ ------ ------- ------- -----------
- ---- Net asset value, end of peiod......................................... $14.55 $15.34 $15.20 $15.39 $14.16 $15.04
====== ====== ====== ======= ======== ===========
- ----TOTAL INVESTMENT RETURN .................................................. 8.58% 13.28% 7.02% 8.75% (.99%) 20.51%(1)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets................................... -- -- -- -- .06% .34%(1)
Ratio of net investment income to
average net assets...................................................... 8.29% 7.78% 7.70% 7.15% 7.34% 7.38%(1)
Decrease reflected in above expense ratios
due to undertakings by the Manager
(limited to the expense limitation provision
of the management agreement).................................................. 1.50% 1.50% 1.42% 1.28% 1.43% .99%(1)
Portfolio Turnover Rate................................................... -- 40.28% 30.99% 34.02% 290.20% 179.54%(2)
Net Assets, end of period (000's Omitted)................................. $293 $25,036 $45,280 $54,224 $44,937 $50,079
(1) Annualized.
(2) Not annualized.
See independent accountants' review report and notes to financial statements.
</TABLE>
DREYFUS INVESTORS GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940 ("Act")
as a diversified open-end management investment company. Premier Mutual Fund
Services, Inc. (the "Distributor") acts as the distributor of the Fund's
shares, which are sold to the public without a sales charge. The Distributor,
located at One Exchange Place, Boston, Massachusetts 02109, is a wholly-owned
subsidiary of FDI Distribution Services, Inc., a provider of mutual fund
administration services, which in turn is a wholly-owned subsidiary of FDI
Holdings, Inc., the parent company of which is Boston Institutional Group,
Inc. The Dreyfus Corporation ("Manager") serves as the Fund's investment
adviser. The Manager is a direct subsidiary of Mellon Bank, N.A.
(A) PORTFOLIO VALUATION: The Fund's investments (excluding short-term
investments) are valued each business day by an independent pricing service
("Service") approved by the Fund's Board of Trustees. Investments for which
quoted bid prices are readily available and are representative of the bid
side of the market in the judgment of the Service are valued at the mean
between the quoted bid prices (as obtained by the Service from dealers in
such securities) and asked prices (as calculated by the Service based upon
its evaluation of the market for such securities). Other investments, which
constitute a majority of the portfolio securities, are carried at fair value
as determined by the Service, based on methods which include consideration
of: yields or prices of securities of comparable quality, coupon, maturity
and type; indications as to values from dealers; and general market
conditions. Short-term investments are carried at amortized cost, which
approximates value.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income (including, where applicable, amortization of discount on short-term
investments) is recognized on the accrual basis.
The Fund may enter into repurchase agreements with financial
institutions, deemed to be creditworthy by the Fund's Manager, subject to the
seller's agreement to repurchase and the Fund's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Fund's custodian and, pursuant
to the terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. If the value of the underlying securities falls below the value of the
repurchase price plus accrued interest, the Fund will require the seller to
deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults on its repurchase
obligation, the Fund maintains the right to sell the underlying securities at
market value and may claim any resulting loss against the seller.
(C) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Fund to declare
dividends daily from investment income-net. Such dividends are paid monthly.
Dividends from net realized capital gain are normally declared and paid
annually, but the Fund may make distributions on a more frequent basis to
comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Fund not to distribute such gain.
DREYFUS INVESTORS GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interest of its shareholders, by complying with the applicable
provisions of the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from substantially all Federal income and
excise taxes.
The Fund has an unused capital loss carryover of approximately $1,040,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to December 31, 1994. The
carryover does not include net realized securities losses from November 1,
1994 through December 31, 1994 which are treated, for Federal income tax
purposes, as arising in fiscal 1995. If not applied, the carryover expires in
fiscal 2002.
NOTE 2-BANK LINE OF CREDIT:
In accordance with an agreement with a bank, the Fund may borrow up to
the lesser of 25 percent of its net assets or $5,000,000 under a short-term
unsecured line of credit. Interest on borrowings is charged at rates which
are related to Federal Funds rates in effect from time to time.
There were no borrowings during the six months ended June 30, 1995.
NOTE 3-MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement ("Agreement") with the Manager,
the management fee is computed at the annual rate of .60 of 1% of the average
daily value of the Fund's net assets and is payable monthly. The Agreement
provides for an expense reimbursement from the Manager should the Fund's
aggregate expenses, exclusive of taxes, interest on borrowings, brokerage and
extraordinary expenses, exceed the expense limitation of any state having
jurisdiction over the Fund. The most stringent state expense limitation
applicable to the Fund presently requires reimbursement of expenses in any
full fiscal year that such expenses (exclusive of certain expenses as
described above) exceed 2 1/2% of the first $30 million, 2% of the next $70
million and 1 1/2% of the excess over $100 million of the average value of
the Fund's net assets in accordance with California "blue sky" regulations.
However, the Manager had undertaken from January 1, 1995 through March 31,
1995, to waive receipt of the management fee payable to it by the Fund, and
thereafter through July 31, 1995 to reduce the management fee paid by, or
reimburse such excess expense of the Fund, to the extent that the Fund's
aggregate expenses (excluding certain expenses as described above) exceeded
specified annual percentages of the Funds' average daily net assets. The
Manager has currently undertaken through December 31, 1995, or until such
time as the net assets of the Fund exceed $100 million, regardless of whether
they remain at that level, to reduce the management fee paid by, or reimburse
such excess expenses of the Fund, to the extent that the Fund's aggregate
annual expenses (excluding certain expenses as described above) exceed an
annual rate of .65 of 1% of the average daily value of the Fund's net assets.
In addition, during the six months ended June 30, 1995, the Manager
voluntarily assumed all or part of the remaining expenses of the Fund. The
expense reimbursement, pursuant to the undertakings, amounted to $229,087 for
the six months ended June 30, 1995.
The undertaking may be modified by the Manager from time to time,
provided that the resulting expense reimbursement would not be less than the
amount required pursuant to the Agreement.
(B) Pursuant to the Fund's Shareholder Services Plan, the Fund reimburses
the Dreyfus Service Corporation, a wholly-owned subsidiary of the Manager, an
amount not to exceed an annual rate of .25
DREYFUS INVESTORS GNMA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
of 1% of the value of the Fund's average daily net assets for servicing
shareholder accounts. The services provided may include personal services
relating to shareholder accounts, such as answering shareholder inquiries
regarding the Fund and providing reports and other information, and services
related to the maintenance of shareholder accounts. During the six months
ended June 30, 1995, the Fund was charged an aggregate of $64,000 pursuant to
the Shareholder Services Plan.
(C) Each trustee who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $2,500 and an attendance fee of $250
per meeting. The Chairman of the Board receives an additional 25% of such
compensation.
NOTE 4-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales (including paydowns) of
investment securities, excluding short-term securities, during the six months
ended June 30, 1995, amounted to $79,944,508 and $77,867,307, respectively.
At June 30, 1995, accumulated net unrealized appreciation on investments
was $825,721, consisting of $904,678 gross unrealized appreciation and
$78,957 gross unrealized depreciation.
At June 30, 1995, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
DREYFUS INVESTORS GNMA FUND
REVIEW REPORT OF ERNST & YOUNG LLP, INDEPENDENT ACCOUNTANTS
SHAREHOLDERS AND BOARD OF TRUSTEES
DREYFUS INVESTORS GNMA FUND
We have reviewed the accompanying statement of assets and liabilities of
Dreyfus Investors GNMA Fund, including the statement of investments, as of
June 30, 1995, and the related statements of operations and changes in net
assets and financial highlights for the six month period ended June 30, 1995.
These financial statements and financial highlights are the responsibility of
the Fund's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements and financial highlights taken as
a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the interim financial statements and financial highlights
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the statement of changes in net assets for the year ended
December 31, 1994 and financial highlights for each of the five years in the
period ended December 31, 1994 and in our report dated February 10, 1995, we
expressed an unqualified opinion on such statement of changes in net assets
and financial highlights.
Ernst & Young LLP Signature
New York, New York
August 2, 1995
DREYFUS INVESTORS
GNMA FUND
200 Park Avenue
New York, NY 10166
MANAGER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 080SA956
Investors
GNMA
Fund
Semi-Annual
Report
June 30, 1995
(Dreyfus Logo)
